EUR/USD: Focus back on Greece

EUR/USD Current price: 1.2707

With US closed on holidays, little action was seen across the board, with majors mostly unchanged since early European opening. Lack of trading interest was a good excuse to center news, market talks and speculation back on Greece: the indebted economy may need up to 2016 to achieve its fiscal objectives, according to the European Commission and the ECB, and some extra €33B. Where will those come from, we don’t know yet. Greece is battling to raise funds to avoid defaulting on a €5bn debt repayment this week, yet what actually matters, is that the agony continues to extend. Is not about whether Greece will get the next tranche of aid: as per now, bailout money was used to repay reckless banks, whilst austerity has served only to shrink economy and increase the relative size of the debt. Since 2010 the Greek government’s external debt has increased from 118% of GDP to 150%, and estimates for next year are near 190% of GDP. Unless that changes, the future is really doomed for the EU.

Technical readings go with fundamentals also in the short term, as the pair trades barely above the 1.2700 mark ahead of Asian opening. For the short term, the bearish stance remains in place, as recovery attempts remained capped below 1.2740/50 area, 38.2% retracement of its latest bullish run, and immediate resistance level; a break below 1.2690, past Friday low, will expose next Fibonacci support, 50% of the same rally around 1.2610.

Support levels: 1.2690 1.2650 1.2610

Resistance levels: 1.2740 1.2785 1.2810

GBP/USD Current price: 1.5870

The GBP/USD consolidates near the base of the daily descendant channel, currently around 1.5850, having posted an intraday low right above, at 1.5864 early Europe. Situation in the UK is also fragile, which puts Pound in Euro path on risk aversion environments. The pair trades at fresh 2-month lows, and break below the base of the channel will expose the 1.5770 area, which stands as strong static midterm support. For the short term, the hourly chart shows price struggling around a bearish 20 SMA, while indicators hold in negative territory, favoring the downside. Intraday spikes were limited to 1.5910/20, former support now immediate resistance; in the 4 hours chart bearish momentum remains strong, supporting the shorter term view.

Support levels: 1.5850 1.5820 1.5770

Resistance levels: 1.5910 1.5950 1.6000

USD/JPY Current price: 79.49

As seen earlier, the USD/JPY maintains a short term bearish stance, trading below 79.60, 200 DMA. The hourly chart shows indicators neutral around their midlines, while 100 SMA continues heading south above current price, also offering dynamic resistance around 79.60. Without much definition, only steady gains above such level will support an upward continuation towards the 80.00 area, as long as 79.10 recent low holds.

Support levels: 79.10 78.80 78.35

Resistance levels: 79.60 79.80 80.05

AUD/USD: Current price: 1.0426

Australian dollar surged back above 1.0410, against the greenback, entering Asian session holding the positive tone. The hourly chart shows price finding support around its 20 SMA while indicators turn flat above their midlines, reflecting latest lack of volume. In the 4 hours chart, upward momentum seems to be easing although as long as above mentioned 1.0410, the upside is favored. Price needs to extend beyond 1.0445 immediate resistance, to be able to approach again the 1.0500 area. The downside remains well protected by a daily ascendant trend line coming from 1.0150, today around 1.0355.

Valeria Bednarik was key speaker at the FXStreet International Traders Conference in October 2009 - Barcelona.
Valeria Bednarik has been an active trader since 2003, specializing in the International Foreign Exchange Market.

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